Lowe’s Cos. Inc. is following the distant footsteps of chief competitor Home Depot Inc. with the purchase of retail analytics technology from vendor Boomerang Commerce. Terms were not disclosed by Lowe’s, No. 23 in the Internet Retailer 2019 Top 1000, but a spokeswoman says the deal has closed.
The acquisition brings analytics technology and expertise in-house, the Lowe’s spokeswoman says, “to improve our existing capabilities and deliver on our strategic priorities” by performing large-scale data collection and analytics to identify pricing changes, gaps in its product lines and in-stock rates; identifying which products are being sold by competitors; and identifying profit margin opportunities.
The purchase advances Lowe’s plan to modernize technology, and the acquisition fits that strategy, Seemantini Godbole, Lowe’s chief information officer, said in the company’s Monday statement. “Pricing and assortment planning have been identified as strategic areas in need of modernization. And when we find the right assets available to buy and advance our strategy, we’ll do that.”
The move dovetails with CEO Marvin Ellison’s strategic plan as outlined late in 2018 and is seen by some as a way to further close the sales gap between itself and Home Depot (No. 7).
The acquisition by Lowe’s “will increase its ability to competitively price its products with a much-improved understanding of demand elasticity,” says Seth Basham, a retail and consumer analyst with Wedbush Securities. “Lowe’s has been well behind the competition in this area.” For example, Home Depot bought data-driven retail pricing startup BlackLocus in 2012 to bolster its pricing strategy, he says.
$500 million annually for technology
Lowe’s CEO Marvin Ellison said late last year that the company plans to spend $500 million per year through 2021 on technology and to hire more than 2,000 engineers to improve Lowes.com, its supply chain, merchandising, administration and other areas of the company. That includes upgrading the retailer’s systems for better visibility into store inventory, Ellison said.
The acquisition boosts Lowe’s technology capabilities and “retail fundamentals,” as well as “bolsters strategic and data-driven pricing and merchandise assortment decisions across Lowe’s businesses,” the company said in the statement. Internet Retailer estimates Lowe’s had ecommerce sales of $3.97 billion in 2018, up 30.0% from $3.06 billion in 2017.
Insights into competing with Amazon
Boomerang Commerce was founded by Guru Hariharan in 2012 and is based in Mountain View, California. The Lowe’s acquisition includes the proprietary technology and tools for the retail analytics platform but excludes customer contracts and related confidential information and data, Lowe’s said. Some employees from the retail analytics teams based in Bangalore, India and the United States will join Lowe’s. After the acquisition, Boomerang Commerce’s product CommerceIQ, which automates ecommerce sales and advertising for retailers selling on Amazon.com, will operate as an independent business under the CommerceIQ.ai name with Hariharan as CEO.
Boomerang’s expertise with helping retailers sell via Amazon wasn’t of paramount importance to Lowe’s, Basham says, “other than picking up insights on how to compete against Amazon.”
Lowe’s has been a Boomerang customer since 2015 and the acquisition adds about 30 employees to the I.T. department, the spokeswoman says.
In another analytics technology acquisition, Zebra Technologies Corp. said Monday it intends to acquire Profitect Inc., a privately held provider of analytics for the retail and consumer packaged goods industries. Profitect says it uses machine learning and analytics to help companies improve inventory and pricing accuracy, out of stocks, supply chain inefficiency, unsellable merchandise and assortment discrepancies. Zebra’s technology helps track and manage inventory in an effort to improve supply chain efficiency. Terms of the deal were not disclosed, but Zebra said it expects it to close in the second quarter.